Dollar Shave vs Dollar General?

Last week saw two important retail events. Unilever’s purchase of Dollar Shave Club and Dollar General’s announcement that it purchased 41 former Wal-Mart stores. A billion dollar purchase for a consumer direct business is exciting and a sign of more retail/consumer disruption to come, however, the 41 brick and mortar store purchase is equally significant.

Dollar Shave Club proved that branded online subscription services providing real consumer economic value are a winner in the online world… but more than half of American consumers are not “prime” households and most likely will never be due to the security issue of receiving boxes at “home” and a lack of disposable income for larger “subscription” purchases. Brick and mortar are still their replenishment solution.

So for the “other America”, Dollar General’s (DG’s) foray into larger format stores and offering fresh “meat” and other perishables is the start of something much larger. DG is about real everyday value. DG with its laser focus on limited SKUs and creative suppliers can win where Wal-Mart failed. In addition, with its 14,000 store footprint this is another nail in the coffin of the traditional high low grocery business.

My bet is within a year of experience with perishables and even gasoline sales, DG will find a much larger set of struggling brick and mortar stores to bring into its “value” family. With it’s smaller and more local formats DG is building 7 Eleven for value consumers.

This is a tale of two “Dollars” and disruption, but in five years the greater disruption is going to be Dollar General’s bold move to find the white space where Wal-Mart and the traditional grocery industry could not compete.